Philly's rowhouse fire season is coming soon. Here's what renters insurance can — and can't — do for you

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Taking a stroll down Elfreth's Alley in Old City Philadelphia, you may notice the markers of a fire insurance policy — known as badges or house plates— affixed front and center on the historic homes there built about 300 years ago.

Some of those plates feature symbols such as four crossed hands holding each other. It's in reference to a "firefighter's carry," a technique used to transport people down narrow spiral staircases during a fire rescue. It's also symbolic of mutual aid or support for volunteer firefighters, as the plates were essentially insurance policy documents. And that symbol was used by Benjamin Franklin, who co-created a fire insurance company with volunteer firefighters in 1752.

The concept was that the house plates were forged out of metal and cast with iron, brass, lead, copper or zinc. In the event of a rowhouse fire, where the only thing left of the structure would be the house plate, the insurance company would know which insurer would be responsible to pay for reconstruction.

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As for Ben Franklin's business, The Philadelphia Contributionship, it still exists today and continues to insure urban dwellings for homeowners.

"Going back in time to the origins of colonial Philadelphia, there's all these wooden structures that were pitched unevenly, super close together," said Mary Ann Cook, executive director of the Maguire Academy of Insurance and Risk Management at St Joseph's University in Philadelphia. "And [if] you look around many parts of our beautiful, wonderful city today, you'll see a number of structures pitched unevenly, super close together. They're just maybe built a little differently using modern construction. But when you think about people living in them, often mixed-use on the first floor and apartments above, we [think about] exposure to risk."

Cook helps train the next generation of insurance adjusters by teaching college classes about risk management.

One bit of advice Cook offers to those students, who often rent their housing in the city, is to purchase renters insurance to protect themselves and their personal belongings as they live away from home for the first time.

It's advice that holds for more than students. Individuals who earn low wages and lack generational wealth are also likely to rent, and are particularly vulnerable to domestic catastrophes. And with a median household income of just $60,302 in Philadelphia, according to the U.S. Census estimate in 2023, about 46% of households inside city limits rent their living quarters, whether a townhome, condo or apartment from a landlord.

So what's the equivalent of a fire insurance policy for tenants? It's called renters insurance.

And while a massive fire that burns down the apartment you live in is a rare — though not unheard of — occurrence, Philadelphia is entering a season with higher risk of fire as residents turn on space heaters or even a stove to keep apartments warm as the temperatures drop, and people without permanent housing seek shelter in vacant structures.

Here's what you should know before deciding whether you should get a renters policy.

What is renters insurance and why should I care about it?

Renters insurance is a policy underwritten by an insurance company that collects premiums — a money payment on a monthly or yearly schedule — from a large pool of people. The company determines individual rates based on the likelihood that a specific policyholder will file a claim.

It's the same methodology used by auto insurance companies to determine how much insurance payments for risky or safe drivers on the road should cost — but there's one big difference. Auto insurance is required by state law; renters insurance is not.

That doesn't mean a landlord won't require tenants to purchase renters insurance. Some include that as a lease requirement. For some renters, that increases the minimum cost of living for their budgets when considering their options across the city.

As Philadelphia neighborhoods are redeveloped through gentrification, landlords are increasingly likely to require renters insurance.

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And the renters in the lowest income bracket may have to pay higher insurance premiums — because data says the risk is greater based on certain zip codes.

Philly tenant rights advocate Nicole Lawrence said that's just a different flavor of redlining (i.e., the denying or overcharging for financial services) all over again for marginalized communities.

"It does happen in insurance and [in] some areas [like Nicetown in North Philadelphia], renters insurance is probably double the cost, if not triple, versus like a Society Hill area [in Center City]," Lawrence said.

For example, a 12-month renters insurance policy underwritten in East Falls reviewed by WHYY News cost less than $200. A similar renters insurance policy in Grays Ferry was nearly $400 for that same year.

How does insurance work, exactly?

A group of individuals pay into the same pot of money held by an insurance company, which determines the likelihood of any policyholder requiring to be paid out at any given time based on a variety of factors.

Those factors include but are not limited to age, gender, zip code, credit score and past claims history. It also includes building construction materials, such as wood structures, brick and cement or metal, and any building safety features, according to an emailed response from experts at Philadelphia-based McCollum Insurance, shared by president Brian McCollum.

Consumer complaints about insurance companies not paying claims after individuals lose personal property are common.

Sometimes there's confusion about the purpose of insurance, which is simply to make policyholders whole again after a loss. It's not an investment meant to provide outsized returns, said Philadelphia Insurance agent Kim Troast Singley, formerly of Troast-Singley Insurance Agency LLC with nearly three decades of experience in the business.

There is also tension for any for-profit insurance company between policyholders who pay insurance premiums and shareholders who expect investor returns. An insurance company wants to service its customers in accordance with the terms of the contract. Trying to avoid valid claims, or misrepresenting the terms, is what is known as "bad faith" lending, which can lead regulators to step in and penalize them.

What's an 'independent' insurance agent?

Some people choose an independent insurance agent to negotiate a good deal for them with an insurance company. Others simply know what they want and buy directly from a major or regional insurance business.

"When you think about liability, Philadelphia is commonly known as a very litigious area," Cook said. "People just don't think about those risks. There's kind of a misperception that I don't have a lot to lose, or maybe down the line when I have a business or a home, but you don't think about it. It's often overlooked."

Some landlords get a premium credit — a discount — on their own commercial insurance policy if they require all the tenants to get their own renters insurance policy, Cook said.

Also, building owners might go the extra mile to reduce their own premiums by clearing snow on sidewalks within six hours of a snowfall and have regular maintenance of the system's fire sprinkler system. In the end, that saves landlords money and increases protections for tenants.

What does renters insurance cover? Or not?

It depends entirely on the exact policy that you purchase. You must read the document. If it's not written down in that legal contract, it's not covered.

And unfortunately, most people do not take the time to read the contract or have trouble understanding the legal terms that are not described in plain English for the average person. When purchasing a renters insurance policy, be sure to ask specific questions of the salesperson or advertising executive to make sure you understand exactly what's covered.

Don't trust what anyone says verbally, only what is written in the policy. Advocate for yourself if you're unsure about something. Don't feel pressure to buy anything right away.

How much does renters insurance cost? How is it purchased?

For auto insurance, there are minimum policies required by state law. For renters insurance, there are no legal minimums, with the exception of any demands by a landlord in a lease contract.

"The typical minimum liability limit is $100,000, which protects the insured from damages that they cause [such as bodily injury and property damage]," wrote McCollum, the insurance broker, in an email. "The cost to increase your liability to $300,000 is minimal, and we recommend considering $300,000 in liability coverage versus $100,000."

The average cost for a renters insurance policy is $200 for a 12-month contract that must be renewed and won't roll over automatically unless specified. It's not the same as a subscription service with auto-renewals.

"The cost will vary based on the amount of contents' coverage that the insured desires. For example, the cost will be much greater for an insured [if they choose $100,000 in contents' coverage versus $20,000]," McCollum wrote.

For example, a renters insurance policy reviewed by WHYY News in the 19129 zip code covers $20,000 of personal property damage, an $8,000 limit for loss of unit and $100,000 personal liability coverage. That policy cost $192, with a $250 deductible. The policyholder has a credit score higher than 650 and no claims history and bundled the policy with auto insurance purchased directly from a major insurance company.

That means if there's a loss at the property, such as a fire, the tenant would be reimbursed up to $20,000 for personal property, such as furniture, a television, computers, smartphones and clothing. The loss-of-use clause refers to the "temporary costs to rent a new apartment until the tenant secures a new rental," according to McCollum.

There is personal liability coverage on that policy, up to $100,000, which pays for damages like if a dog or cat bites someone and that person files a lawsuit to recoup medical expenses. In addition to that, there's a $2,500 direct medical payment to others harmed while inside the apartment, according to the policy.

So in addition to the $192 premium for a 12-month contract, there's a deductible, which means if there's a fire at the apartment, the first $250 must be paid back to the insurance company or deducted from the claim settlement. So if the damage is worth $5,000, the insurance company pays out $4,750.

"Most insurance companies will offer enhanced coverage packages [which will cost more than standard insurance]. We recommend all of our clients to consider purchasing enhanced packages," McCollum wrote.

For example, if a toilet overflows, but a tenant has a renters insurance policy that covers sewage backups, it's likely that damage to personal belongings as a result of the toilet water would be covered, McCollum explained.

There are insurance requirements for landlords set by insurance companies, which is to insure the building for "100% of the reconstruction cost, if the landlord desires replacement cost coverage," McCollum wrote.

Here's one more thing to remember: Make sure to ask for "replacement cost" of personal belongings, said insurance agent Troast Singley.

"I would never sell a policy without replacement cost," she said. "That means, let's just say you have a TV. You bought it two years ago, it cost $1,000. Well now, you have a loss, somebody came and installed your TV. Now that same TV costs $3,000. If you have a replacement cost [policy], the company is going to give you what it would cost to buy that same TV in today's market," she said.

Otherwise, depreciation would come into play and an insurance company could say that the same TV is now worth only $500 even though it was purchased for $1,000, because the market value has changed since it's not new anymore.

"There's a lot of ins and outs. If people aren't aware of that, they aren't going to have the coverage they need," she said.

What does renters insurance cover if there is a fire in my apartment? In my building? In my neighbor's home?

In the event of a fire, the average renters insurance policy will cover "losses" up to a certain threshold.

That fire cannot be ignited on purpose by the policyholder for the goal of collecting money — that is considered insurance fraud, and it's a crime. But there's often a clause that allows for "stupidity," says longtime Philadelphia insurance agent Troast Singley.

That means it doesn't matter whether you left the stove on too long and the pot burned up and set the curtain on fire, or if a child got ahold of something flammable and caused the fire, or if a careless neighbor lets their own fire get out of control and it burns down or causes damage to your apartment.

Why? Because insurance companies want to avoid what's known as a "bad faith" claim against them, which essentially means that policyholders can ask regulators to crack down on companies that don't cover claims detailed in the policy coverage documents.

Does it matter if my landlord's electrical wiring isn't up to code? What if my landlord doesn't provide smoke alarms or the sprinkler system is not up to code?

No, it doesn't matter for you and your renters insurance policy.

"Renters insurance will pay for the tenant's contents, regardless if there is a code issue with the building," wrote McCollum, the insurance broker.

But it does matter for your landlord. That's because the insurance company will look to file a lawsuit to get reimbursed for expenses with the landlord's insurance policy picking up the tab, because the landlord was at fault.

So the renters insurance company will file a lawsuit, if necessary, to recoup expenses paid to you, the renter, for reimbursement with the landlord's insurance company policy on your behalf. That's one facet of what you are paying for.

What if my smoke alarms are sitting in my kitchen drawer at the time of a fire?

That same concept where companies can't avoid paying out legal claims even if it's due to a mistake will apply.

"Renters insurance will pay for the tenants' contents, if the sprinkler system did not work or malfunctioned. Same for the fire and smoke alarms," McCollum continued.

What should I do if my renters insurance claim is denied by the company?

You can appeal any denial of insurance coverage claim, whether it's health, life, auto, renters, home or others. Check your state's insurance department consumer protection unit for the most accurate information. In Pennsylvania, there's an agency that can help.

Keep in mind, some Philadelphia landlords are now requiring that tenants have renters insurance.

Philly tenant rights advocate Nicole Lawrence said that renters should read the fine print before signing anything, ever.

"We've also had some tenants come to us that thought because they had renters insurance, that their personal property would be covered and their belongings would be covered," Lawrence said. "And unfortunately, that was not the case. The only thing that was covered was the actual dwelling of their unit in the building, not their personal contents."

The Philadelphia Tenant Union Representation Network has a free hotline that takes calls and hosts drop-in webinars for renters to better understand their rights in the city. That hotline number is 215-940-3900.

What else does renters insurance often cover?

It depends on the exact policy, but some can include increased protection for electronics like televisions, computers, smartphones or luxury items like jewelry. That wouldn't likely be standard coverage, though, and might cost extra.

"If you are the policyholder, you are responsible for what you can control and what the policy lists," said Cook, the Saint Joseph's University professor.

That could include fire, smoke and water damage due to fire sprinklers turning on. It's important to know that does not include floods, as in water that arrives from the ground up, not the roof down.

"If there's a fire in my apartment building a few units down and luckily it didn't reach my unit, I'm so happy about that, but maybe I have to get fans to blow the smoke out and maybe got some water coming down one side and that hit my TV, my sectional," Cook said. "Damage to my property would be covered."

Not everything that causes damage to an apartment is covered by renters insurance.

"Renters insurance does not cover flood. A standard renters insurance policy will cover water damage from a burst pipe, but flood or surface water is excluded. If a tenant desires flood coverage, they would need to purchase flood insurance coverage [separate from renters insurance]," McCollum wrote.

Most renter's insurance policies include personal liability. That means if your dog bites the child of your neighbor while you're walking down the street and they file a lawsuit against you, your attorneys fees are covered.

But it won't cover all animals.

"Most insurance policies have exclusions for exotic pets," McCollum wrote, meaning they aren't covered.

More common are issues with dogs. Insurance companies are more likely to cover if the dog is not a restricted breed, does not have a history of biting people and has proof of obedience training.

"[The insurer] may ask questions like, 'Has your puppy been to puppy school? Do you keep it on a leash?' You're out there walking [in your neighborhood]. I see it all the time. Everyone wants to stop and say hello and pet them," Cook said. "All you need is one dog bite. Everything's great with your neighbors, you don't even know their name until they go to the ER or perhaps need multiple surgeries. All of sudden, you're into a six-figure lawsuit."

Planning ahead helps save individuals the pain and extra work of begging for money from relatives and strangers on the internet later, Cook said.

"For just a couple hundred bucks a year for renters insurance versus thousands and thousands of dollars that you have to pay out of pocket or begging someone to help you with lawyers fees or [set up] a GoFundMe," Cook said. "Somebody might say, 'I fell in your apartment, I had a little too much to drink because I was bumming over that Phillies loss.' All of a sudden my host liquor liability in my apartment comes into play. These are things that people just don't think about, understandably, until it happens to you."

Is renters insurance worth it?

That's up to you.

Philadelphia's Department of Licenses and Inspections confirmed that as of October 2024, tenants are not legally required to have renters insurance.

Keep in mind that renters insurance policies cover an individual — not the entire apartment — so each person, if there are roommates, must have their own policy.

"Do your own risk mitigation and sleep easily at night. Let [your neighbors] have nice little bonfire parties and shoot off fireworks and not care where all the sparks go," Cook said. "A fence makes for a good neighbor."

Or if you're required to have it because of a landlord's lease demand, there's some ways to save money on a policy.

If you have a vehicle or any other insurance policy and bundle it with the same insurance business, you could get a discount. There are other potential discounts, such as a "clean" history, which means a history of not filing insurance claims for several years.

Independent insurance brokers can help individuals shop around for different policy options. And individuals can purchase insurance from big umbrella companies directly, without an agent.

The cheapest renters insurance policies are available from online companies, but individuals should make sure to read the fine print and make absolutely sure that the policy covers exactly what they need it to at the price point they can afford.

"If you have minimal resources available, if there's an escalation in your environment of risk, maybe this year is the year. Is the weather forecast calling for a colder [winter]?" Cook asked. "It doesn't have to be a forever thing."

What does the renters insurance market look like in Pennsylvania?

There are more than 200 active insurance organizations statewide that underwrite policies for homeowners, renters and condo owners.

The Pennsylvania Department of Insurance does not have data available about how many homeowners policies are underwritten in the state compared to renters insurance. Instead, the state tracks coverage using a concept of "house-years."

The definition of a "house-year" in insurance refers to 12 months of policy coverage on a dwelling. But it can also be counted as several policies with coverage totaling 12 months, which could be the case if an individual moves, or changes insurance companies every three months, seeking a lower rate.

There were 3.8 million insurance policies on dwellings across Pennsylvania when calculated by "house-years," the industry standard metric, in 2021. According to a National Association of Insurance Commissioners report released in 2023, nearly 20% of the dwelling insurance market was renters, the rest covering property owners or cooperative arrangements.

The average premium for a 12-month renters insurance policy in Pennsylvania was $147 in 2021. More localized data was not available.

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